Am I correct in thinking the best thing to do with minor races is colonize another planet in their system? That way you get whatever it is they give to that colony as well as some votes for the Galactic Presidency (or whatever it's called).

I personally choose to kill off the minor civilization. They usually are setting on a very valuable planet in ever aspect (bio, size and resources abundance). The bonus the minor race provides to by colonizing a lesser world in the same system, is far less than you would get from just actually colonizing on their planet with your own citizens. Plus the cost of upgrading the benefits the minor race provides is incredibly high for the value you get from the increase.